US steelmakers appear poised to benefit from Trump's policies, but opposition exists
By Joe Innace, content director, Americas metals
Welcome to The Snapshot, a series examining the forces shaping and driving global commodities markets today.
Today, we’re 41 days into the presidency of Donald J. Trump. You may have seen him Tuesday night, speaking before a joint session of Congress for the first time. More on that in a moment.
You’ve certainly seen the protests. But do you know who’s arguably most happy with the Trump Administration? I’ll tell you who. American steelmakers.
Since the election, the share prices of major steel producers, and related companies have surged an average of nearly 50%.
Trump’s steel-friendly administration is boosting confidence on both the supply and demand sides. The president’s America First agenda includes buying and using American steel first for major infrastructure and pipeline projects. It also involves the likelihood of more or continued import restrictions — marked by an aggressive stance in battling unfairly traded steel.
But there is some opposition and protest in Steel land. The American Institute for International Steel, representing steel traders, importers and exporters, has come out opposed to Trump’s “Buy America” plans for new pipeline and infrastructure projects, calling the provisions “nothing more than a subsidy.”
And there are those who would like to see Trump’s ultimate trade policy consider the potential impact on consumers of steel. Recently, Bob Weidner, president and CEO of the Metals Service Center Institute, whose members are major buyers of steel, wrote an opinion piece for The Hill. He noted: “Enforcement to protect one link in the chain, say a tariff on steel or aluminum that levels the price for mills, is undeniably important. But the impact of this action ripples throughout the supply chain. Trade enforcers must at the same time be willing to protect fabricators or other processors from the resulting cost increases that will erode their competitive edge.”
Fact is, since the election, steel buyers are paying more for US-made steel. It’s up about 25% — fueled largely by steel mill optimism for the Trump Effect.
Last week, when this graph was prepared, steel mills were independently looking to re-establish previous price levels of around $640/st for hot-rolled coil, the industry’s bellwether product. This week steel prices do look like they are trending higher.
Back to Tuesday night and the president’s speech before Congress. From a commodities perspective, coal and steel got early shout-outs. Oil and gas got short shrift. Lean on specifics overall, Trump did not delve much into energy policy. Platts has updated its factbox related to the Administration’s impact on energy regulations, which you can find right here on Platts.com.
Trump did mention a $1 trillion infrastructure plan he will ask Congress to approve, funded by public and private capital. And the president again, Tuesday night, laid out an ambitious agenda that resonates with steel producers — if not all steel consumers.
The Trump-Steel dynamic is one to watch. So far, it’s been a textbook study in shaping market psychology. From this president, nothing has really happened yet in terms of trade enforcement, infrastructure spending, regulatory rollbacks and tax breaks. But American steel producers are feeling the love — and that positive sentiment is impacting the steel market.
Until next time on the Snapshot — we’ll be keeping an eye on the markets.